8 Cost Cutting Strategies for Spine Surgery

Written by Laura Dyrda |
February 06, 2013

Here are eight strategies to cut costs associated with spine surgery.

1. Analyze costs for savings opportunities. Understand where the big cost centers are for spine care so you can locate opportunities for cost reduction. Spine surgeons should be part of this process because if they don't know what the procedure costs, they can't find areas for savings.

"The first step in cost cutting is measurement and the second step is breaking down the entire costs for the procedure from A to Z," says Bryan Oh, a neurosurgeon who focuses on spine surgery at BASIC Spine in Orange, Calif. "Once you have a sense of that you can see the opportunities for cost improvement. I think that's really important because if you don't even know where the big cost centers are, you will be taking a stab in the dark."

The biggest costs associated with spine surgery are often implants, medications and 30-day readmission rates. Collect the DRT data for each spine center surgeon and discuss the variance.

"They have to engage the surgeons to see how much the procedures cost," says Dr. Oh. "Once the surgeon has a handle on the data, start lowering that rate. Demonstrate you can lower the rate and present that data to insurance companies, which will really make you a preferred provider."2. Renegotiate instrument and implant costs. Instrumentation and implants are likely the biggest cost center for a single case and there are plenty of opportunities to knock those prices down. First consider whether you need a brand new microscope or the latest implant generation; if not, you can save by continuing to use your original microscope or purchasing commoditized implants for wholesale prices.

"The first thing to realize about cost savings is that sacrifices are going to have to be made in terms of the instrumentation, haemostatic agents and other products that are our favorites," says Brian R. Gantwerker, MD, of The Craniospinal Center of Los Angeles. "We'll have to part with them or renegotiate our prices. In order to maintain quality of care at a reduced cost, we ourselves will also need to do our own cost cutting."

Streamlining the implants so everyone in the group uses the same devices will give you more power to form an exclusive agreement and negotiate prices down for individual implants. More hospitals now are partnering with surgeons to help them during vendor contract negotiations.

"If we are going to do a fusion, pedicle screw case or especially biologics, surgeons have to very aggressively be involved in contract and price negotiations for the product," says Dr. Gantwerker. "I was working with a hospital in Southern California and did negotiations for their microscope and operating room table, and I was able to work down the price by working with two different companies. As a surgeon, you have clout because you are bringing these devices into the operating room. Some surgeons are reticent of getting into the dirt, but for cost effectiveness it's important."

Dr. Gantwerker recommends surgeons first determine a price based on what their budget allows and then ask for 10 percent to 20 percent below that price initially. As each side negotiates to the middle, surgeons should be able to hit their target price. However, they should also be willing to walk away if necessary. "You have to picture it like buying a new car and be willing to leave," says Dr. Gantwerker. "Ninety percent of the time they will be back with a better price; however being willing to cut your losses in case they do not is extremely important."3. Standardize implants by choosing one vendor. Not every physician will want to use the same type of implants, but Sandi Baber, regional vice president of operations for Meridian Surgical Partners recommends standardizing to a single vendor to ensure discounts for your supplies. For example, she encountered a center that used a vendor that provided approximately 12 different implant sets for ACDFs. The surgery center selected two or three of those 12 implants and negotiated with the vendor to lower the cost.

"You'll get a better cost from the vendor if you pick two or three of their implants, because they've garnered your entire business," she says. "This will also help you work with payors, because you can demonstrate that you were able to reduce the cost of implants."

She warns surgery centers that some vendors may be accustomed to working with hospitals, which accept a higher price on implants because they charge patients more for surgery. "One particular vendor did not understand that the surgery center can't pay three times the retail value and then pass that cost on to the patient," she says. "ASCs are about providing high quality care at a lower cost."

4. Optimize efficiency in the operating room. While minimally invasive surgery has many benefits for appropriate patients, in some cases it may be quicker to perform open procedures. Figure out how to maximize operating room time and you'll be able to lower cost per case because patients will need less anesthesia and you'll lower the risk of infection.

"You want to use your operating room time more efficiently," says Dr. Gantwerker. "Sometimes doing an open operation is faster than microscopic or endoscopic operations. Another technique is to use two surgeons on every surgery because it might be more cost-effective; the surgery is done faster and you have two sets of eyes looking at the films so you can get the patient out of the OR quicker. A big factor in cost is the time spent in the OR."

Consider whether there are process or protocol changes you can make to make better use of the time in the operating room as well as speed the transition time between patients.5. Develop treatment protocol. Everyone within the spine center should understand treatment protocol to provide the best care and optimize resources for patients. Not every patient will need surgery and providing the appropriate care for patients can go a long way toward lowering the overall costs for episodes of care.

"It seems like it's obvious, but if the appropriate care is rendered to the patient, there will be no complications and the cost will be less," says Dr. Oh. "If a fusion is needed, that's going to drive up the cost of care. However, if there are other treatment options you can provide well for the patient that will drive costs down."

If patients don't need surgery, make sure they are directed to the best specialist for their care so they aren't bouncing from one to the next without ever receiving effective treatment.

"This is easier to track with electronic medical records because anyone who touches the patient will log their interaction," says Dr. Oh. "You can see who did the surgery, intake and follow up. If the patient comes in with a practice or HMO, you can see how much their care costs by provider and who is providing the best care at the most reasonable rates. "6. Take steps to reduce readmissions. The overall cost of care includes 30-day readmissions, which bump up costs significantly. Collect data on readmission rates and figure out how to avoid them in the future.

"Many of the high costs come from an excessive length of stay or repeat readmissions from a single patient," says Dr. Oh. "Those are huge cost generators. You can see it as a trend in a specific hospital or surgeon group. I think once some of that data becomes available, surgeons will be able to compare themselves within their peer groups and national data so they can make improvements."

Reduce readmissions by focusing on new protocols to eliminate the problem, such as hospital-acquired infections, complications or postoperative pain management. Work with the nurses and other specialists at the hospital to lower these rates. Pay extra attention to patients who are at high risk of readmissions — such as older patients — to ensure they have everything they need before leaving the hospital.

"In the future, insurance companies will see the outliers who have higher readmissions, and those individuals or hospitals won't get good contracts," says Dr. Oh.7. Cut down on disposables. There are some devices and systems that use a high volume of disposables, which significantly increases the cost per case. Pay attention to the supplies such as bipolars and dural grafting material that are disposable but extremely expensive.

"There are certain retractor systems with disposable pieces that drive up costs," says Dr. Gantwerker. "Push more toward using a reusable package that is just as effective. That should be one of the top priorities to cut costs."

When surgeons are actively working with hospitals to cut their costs, especially if their work includes materials changes and vendor negotiations, they can add a consulting agreement to their relationship. "Nobody in this country works for free," says Dr. Gantwerker. "We are entitled to charge for our time if we are doing that service to the hospital, and we can be compensated for it at a reasonable rate."8. Make big purchases smartly. Just because you are trying to cut costs doesn't mean that spending more upfront is always a bad idea. Capital purchases come at a big expense and you want to put quality first, especially if you could realize a cost savings later.

"Part of cost savings is spending money in the right place," says Dr. Gantwerker. "Maybe a more expensive microscope is better, but later the depreciation is less and the reliability actually holds. You will realize the cost benefits later down the road, when you do not need to service it for multiple reasons."

As an example, some practices may choose to purchase Apple computers at a higher initial price than Windows-based personal computers. However, there is a cost savings long-term because they won't have to spend additional money fighting viruses; replacing faulty boards and monitors and the OS X operating system is more robust than Windows or other systems.Dr. Brian Gantwerker is a spine and neurosurgeon with The Craniospinal Center of Los Angeles. He earned his medical degree at Rush Medical College in Chicago and completed his fellowship at the Barrow Neurological Institute in spine surgery.

Dr. Bryan Oh with BASIC Spine is board certified in Neurological Surgery and received his medical training at Stanford University with a residency in neurosurgery and fellowship in spine surgery at the University of Southern California.